Swiss early-stage ecosystem has gained momentum

Transcription

1 " early stage investments by entrepreneurs NICOLAS BERG Swiss early-stage ecosystem has gained momentum SECA evening event Zurich 11. September 2013 Redalpine Venture Partners Ltd, Pfingstweidstrasse 60, 8005 Zurich, Switzerland, , "

2 Agenda 1. About me & Redalpine 2. Conditions to enable a high-tech startup cluster 3. Impact of high-tech startup cluster 4. Swiss high-tech startups 5. Swiss early-stage investors 6. Challenges 7. Opportunity & risks 8. Wanted investor types 9. Interfaces to Corporate Finance M&A 2

3 Speaker: Nicolas Berg Serial entrepreneur with 10 start-ups ( ) - e.g. founder of Borsalino 1998, sold 2000 at 20x multiple to Ringier - CEO Sharoo since June 2013 Full time angel investor in 16 start-ups ( ) - e.g. Investor & Country Manager XING IPO at 30x multiple 2006 Partner at Redalpine Venture Partners (since 2007) - Built a portfolio of 20 European high innovation start-ups with Redalpine Capital I & II - 5 portfolio companies ranked among 13 Swiss top start-ups in 2011 Lecturer, journalist and jury member - Teaching students & entrepreneurs at venturelab.ch since Jury member of business plan & seed money contests (Venture kick, SVC, Suvorov) 3

4 Redalpine in a nutshell Manages Redalpine I CHF 20M micro VC fund ( ) Manages Redalpine II CHF 30M* micro VC fund ( ) - Seed/early-stage in continental Europe (* aims at CHF 60M in 2nd closing) Most innovative sectors in Europe - Technology/New Media and Life Science Fund thesis - European seed/early stage offers potential for superior exit multiples - Best choice in Switzerland leading accelerator in Berlin Convincing track-record 4

5 Conditions to become a high-tech cluster 1 Successful startup founders à role models 2 Successful early-stage investors à Venture Capital 3 International Top-10-university à innovation, spin-offs 4 Qualified immigrants à recruiting, risk takers 5 Vital support ecosystem à entropy thru networking, training 6 Non bureaucratic research grants à transfer 7 Mature companies of same sector à cooperation, M&A, recruiting 8 General economic conditions & infrastructureà image, recruiting 9 Attractive home market à faster & safer Proof of Market 5

6 Great job creation impact of startups US start-ups create 3 million jobs per year, existing firms slash 1 million jobs (Kauffman Foundation Jobs 4m 3m 2m 1m 0-1m US start-ups create 3 million jobs per year Net job change startups <5 yrs Net job change companies >5 yrs - 2m - 3m - 4m Source: Kaufmann Foundation, Business Dynamics Statistics, Tim Kane - 5m

7 Spin-offs by international top-10-universities ① Most Swiss university spin-offs by ETH, EPFL, UZH ② Number of spin-offs independent from economic sentiment (e.g. 2008/09) 7

8 Top exits of Swiss ICT startups (12 years) 1 Oanda à Index Ventures 2 Search.ch à Post à Tamedia 3 Scout à Ringier 4 Auktion24 à Ricardo 5 Comparis à Investors 6 Borsalino à Cash Ringier 7 Kelkoo à Yahoo 8 LeShop à Bon appétit 9 Mediastreams à Microsoft 10 LeShop à Migros 11 Endoxon à Google 12 Jobs.ch à Tiger Fund (4 years) 1 Wuala à LaCie 2 Svox à Nuance 3 DeinDeal à Ringier 4 Doodle à Tamedia 5 Liberovision à Vizrt 6 Procedural à Esri 7 Trigami à ebuzzing 8 Fashionfriends à Tamedia 9 Borsalino/Cash à Bankzwei 10 Umantis à Haufe 11 Jobs.ch à Ringier/Tamedia 12 Spontacts à Scout 13 Digitec à Migros 14 Housetrip à Index 8

9 Top exits of Swiss life science startups (5 years) 1 Actelion à IPO 2 Prionics à 30x pay-back 3 Axovan à Actelion 4 Jomed à IPO (4 years) 1 Arpida à IPO 2 Glycart à Roche ($200m) 3 Serono à Merck ( 10.2b) 4 Speedel à Novartis ($880m) (3 years) 1 Esbatech à Alcon ($589m) 2 Neurimmune à Biogen 3 Levitronix à Thoratec 4 Okairos à GSK 5 Glycovaxyn à investors 9

10 About 2000 Swiss early-stage investors ICT: Early-stage VCs, angels & founders with recent top exit 1 Index Ventures 2 VI Partners 3 Brains-to-ventures 4 Redalpine 5 Creathor 6 Beat Schillig 7 Peter Schüpbach 8 Klaus Hommels 9 Oliver Jung 10 Roland Zeller ( ) Live Science: Early-stage VCs, angels & founders with recent top exit 1 Index Ventures 2 VI Partners 3 Redalpine 4 Nexgen 5 NVF 6 BioBAC Basel 7 Bruno Oesch 8 Peter Pfister 9 Jürg Geigy 10 George Haas ( ) 10

11 Challenges for early-stage investors ① Early-stage à smaller transactions à small fund à lower fees ② Active investment managers à higher returns à 5 startups per manager ③ Diversified portfolio 15+ à better risk return à 3+ investment managers ④ Entrepreneurial skills needed to select winning early-stage deals 11

12 Opportunities & risks 1 Early-stage angel investments deliver 27% IRR - 8 studies in US/UK on historical return in business angel markets, RSCM But <10% of virtual portfolio (>6000) delivered >70% of returns 3 «Average» investor got 27% IRR, but median investor looses money 12

13 Wanted investor types for Switzerland 1 Serial entrepreneurs with at least one top exit 2 Micro VC funds - managed by serial entrepreneurs (age 25-45) and successful angels - Very active investment approach in seed and early-stage - Diversified portfolio of Entrepreneurial LPs (serial entrepreneurs 50+, family offices) 3 Co-investment & side-car funds - Less active or passive investment manager approach - Government and corporate funded (e.g. HTGF) - Driven by economic impact, not returns only 13

14 Interfaces to Corporate Finance 1 Exit planning starts at deal selection & term-sheet negotiation 2 Professional & fair term sheets & shareholder agreements - Tag along, drag along - Minority rights & corporate governance - Pooling - Single liquidation preference - Gentlemen rules (e.g. against excessive squeeze outs/dilution) - Business lawyers that offer broad range of templates & product pricing at early-stage - Big-4 consulting companies may further bigger rounds or exit 3 Early research & market reach cooperation M4E) might further better exit - Examples: Glycart, StudiVZ, Borsalino 4 Corporate investor at early-stage might reduce risks - But: might add cost, and - reduce maximized exit multiple 14

15 Bonus slides 1 Scouting talents delivers better multiples than acquiring stars 2 Pro-active investors know where the puck is going to be 3 PE best asset class 10 out of 20 years (and worst 4 out of 20) 4 PE best in class if combined with commodities and healthy bonds* (* = bonds from governments & corporations with little debt) 15

16 Grow big stars by scouting many talents Analogue to a football team you have 2 options: invest $100m to buy a star (Bale, Messi or Ronaldo) à try to earn $110m extra with him (à 1.1x) or invest $5m to scout & train 20 young talents à sell best one (Doumbia, Shaquiri) for $20m (à 4x) à good Micro VCs prefer a movie rather than a photo (= 3 pitches) 16

17 Invest pro-active don t follow the crowd An ice hockey player can either: skate to the place where the puck is now as most players or to the place where the puck is going to be (Wayne Gretzky) Source: 17

18 Private equity best in class sometimes Returns year by year % 48.3% 14.2% 31.5% 5.3% 60.6% 36.8% 54.0% 48.5% 40.9% 49.7% 13.4% 32.1% 45.5% 32.2% 25.6% 36.4% 32.7% 6.6% 41.9% 28.3% 17.5% 41.0% 12.3% 26.3% 5.1% 22.2% 34.4% 18.6% 24.3% 34.6% 27.3% 10.3% 11.6% 36.4% 17.3% 12.9% 22.8% 9.0% 4.1% 30.0% 23.0% 9.0% 19.4% 9.7% 22.5% 4.4% 20.7% 33.9% 16.2% 8.7% 26.5% 11.3% 9.3% 10.1% 33.1% 15.6% 9.5% 20.1% 8.3% -4.9% 26.1% 11.9% BEST ASSET CLASS Highest return that year 8.8% 18.5% 8.7% 14.0% 3.1% 20.6% 17.8% 15.8% 8.6% 24.9% 9.1% 4.9% 3.5% 20.7% 14.7% 8.5% 10.4% 7.4% -23.3% 19.7% 11.8% 7.1% 18.3% 8.2% 13.0% 1.7% 20.3% 14.4% 13.7% 5.8% 14.9% 8.7% 2.8% 2.0% 19.8% 11.8% 7.8% 9.3% 6.6% -25.4% 18.7% 9.0% 1.5% 16.7% 7.1% 12.2% 1.4% 16.6% 13.5% 10.2% 2.9% 5.6% 6.8% -3.9% 1.0% 12.0% 5.4% 3.4% 5.2% 5.7% -38.4% 13.5% 9.0% -4.7% 14.5% 4.4% 10.3% -2.4% 12.1% 5.8% 8.2% -5.1% -0.7% 4.1% -16.8% 0.2% 8.2% 3.1% 2.7% 4.3% 4.6% -40.7% 13.4% 5.2% -17.0% 7.1% 4.2% 3.5% -3.5% 11.1% 4.0% 6.0% -17.8% -2.0% -13.2% -18.0% -19.9% 3.2% 2.7% 2.0% 4.3% 4.2% -46.5% 3.3% 5.1% -34.2% -6.1% -5.2% -12.3% -3.9% 6.5% 3.3% -14.1% -35.7% -6.0% -18.6% -31.9% -32.5% 1.3% 1.5% 1.7% -15.1% -17.1% -50.7% 1.4% 0.5% Equally weighted Portfolio Private Equity USA Hedge Funds Liquidity USD Corporate Bonds USD Real Estate USA Source: UBS QIS Bonds USD Equitiy Developed Countries Commodities Nur zur Veranschaulichung. Die Marktbedingungen können sich ändern und die Renditen schwanken. Bitte lesen Sie die Erklärungen unter «Simulierte historische Performance» am Ende dieses Dokuments. Bitte beachten Sie, dass diese Seite immer in Verbindung mit den Risikoinformationen und Begriffserklärungen im Anhang zu dieser Präsentation zu 18 lesen ist. WORST ASSET CLASS Lowest return that year

19 PE always best in class if combined Go for a mix with low correlation and high returns: Combine PE with commodities, corporate bonds or real estate Bonds (USD) Equity MSCI World Commodities Hedge Funds Real Estate (REITS) Private Equity Bonds (USD) Equity MSCI World Commodities Hedge Funds Real Estate REITS Private Equity Source: UBS WMR; generated by QIS 19

20 «You miss 100% of the shots you don't take.» «To evaluate the potential of a new idea requires a clear understanding of the market dynamics. We trust in the team of Redalpine to master this challenge successfully.» Wayne Gretzky, Hockey legend Jürg Staub, Reichmuth & Co Redalpine Venture Partners AG Pfingstweidstrasse 60 CH-8005 Zürich Switzerland phone